Until recently, if you’d told me I needed to spend more of my life relaxing or having fun, let alone…
In the lead-up to the general election in the UK this year, everyone was talking about property. In the crowded south of our archipelago, it’s an obsession rivalled only by immigration – and that’s because people are worried about immigration’s effects on house prices. If you own a property, everyone wants to know: how much is it worth; how much did you pay for it; how much has its value gone up? If you don’t own a property, they ask: will you ever be able to afford one; how much are you paying in rent; how much do you need to save to get on the housing ladder?
For most Brits, property is somewhere between a tyranny and a conspiracy, wrapped up in the lottery of birth. Housing is wildly unaffordable compared to wages. Demand outstrips supply. The world’s wealthiest people park their wealth in London’s real estate, and wait for it to grow. If you own a property in southern England, the chances are that it earns more money each year from rising prices than you do from working. Privilege begets privilege – something of a tradition here. Aristocrats still own more than a third of the United Kingdom. Seventy per cent of land is owned by less than one per cent of the population.
You’re probably not surprised by numbers like this, or the low grade grumbling accompanying them. We encounter their ilk – and worse – all the time in accounts of global wealth. According to recent research from the charity Oxfam, the richest one per cent of the world’s population will by the end of 2015 own more than the remaining ninety-nine per cent put together. Inequality seems to be one of the inherent properties of property in the 21st century. Ownership begets more ownership.
How does property differ from wealth? Both have several meanings, depending on context, but there are some fundamentals. Property isn’t just housing. It denotes everything and anything you own, although it doesn’t have to have any monetary or exchange value. A broken piece of childhood memorabilia kept for sentimental reasons; old school reports and family papers; a building whose repair costs are greater than its sale price: all these are property, although owning the last will make you less wealthy than if you had nothing at all.
This brings us handily onto negatives – and to the distinction that, while property can never be negative, wealth often is. As the British author and economist Tim Harford once pointed out, his two-year-old son is technically wealthier than the world’s two billion poorest people, because his son has no debts. Net wealth is simply assets minus liabilities. So long as someone has put a price on it, it counts.
Lack and disadvantage don’t tend to be listed as an inheritance, but they are every bit as bound up with ownership as privilege: if you want to get ahead, the saying goes, pick your parents carefully. And for all the travails and revolutions of our last few centuries, the most fundamental factor in ownership remains what it was millennia ago: birth, and those who call you kin.
In mid-April this year, a leading business publication put the word “dynasties” on its cover, glossed beneath as “the enduring power of families in business and politics.” More than ninety per cent of the world’s businesses, it noted, are either controlled or managed by families. In politics, dynasties wield the kind of influence associated with feudal lords in fiefdoms: names like Clinton and Bush in America; Ghandi in India; Kenyattas in Kenya; Trudeau in Canada; Fujimori in Peru. You can’t own governments like you can own companies, but the patterns are similar. In each case, a name and a history bring not just entitlement but networks, experience, influence; longer perspectives than those simply trying to get ahead; loyalties larger than profit.
What does it entail for something to become your property? There are five main methods: buying, making, finding, taking, and receiving as a gift or inheritance. They span quite a gamut of activity, but have a few things in common. All must be backed by law to count as more than a matter of opinion; all favour incumbency, influence or opportunity; and all are ultimately subjective. Ownership is not inherent to the Earth or existence – it lives and it dies with us, like faith, like love, like hatred.
Equally significant is what happens when none of the above routes to ownership are available. There is only so much space in the world – so much air, so much water, so much land, so many resources buried in the earth or extractable from the sky. What to do when everything outside your own skin is already claimed? For this, there is quite a different vocabulary: renting rather than buying; borrowing rather than making; stealing rather than finding; losing rather than receiving.
I am the owner, among other things, of a car. I bought it second hand a few years ago in cash, with some help from my family. A friend of mine recently needed to buy a car for work. Unlike me, he and his family didn’t have enough savings to buy one second hand for cash. So he was forced to buy a new car from its manufacturer, using a credit scheme specially designed for the purchase of brand new cars.
Car manufacturers aren’t very interested in encouraging the purchase of second-hand cars, and he couldn’t pass the more stringent checks required to get a bank loan or to finance a second-hand purchase. He thus owns a fraction of a brand new car – and pays interest every month on the larger part that he doesn’t own – because he can’t afford to buy something cheaper. And what the car costs him means there’s plenty more he now can’t buy either.
This is the way credit works: as a mirror image of need. If you already have a lot, you’re able to borrow still more – on favourable terms. The less you have, however, the worse your options are – though you’ll have fewer alternatives to borrowing, begging or renting. For the poorest, as in Tim Harford’s example, everything that’s worth anything will be owned by somebody else.
It’s not that renting is automatically bad, or ownership always good. What matters most is power, and how it is used or abused. As Matthew Taylor, chief executive of the Royal Society for the encouragement of Arts, Manufactures and Commerce, usefully summed up in a 2013 article: “rent-seeking [means] using market position to make money without adding value” – something that perfectly captures property’s principal corruption. If you control enough of something – anything – you can profit without offering anything beyond power itself as justification.
This is why we need laws that balance entitlement and opportunity, redistribution with protection, justice with privilege; and why those with the most to protect seek to stack the odds in their favour.
All of which brings us back to the recent British election, and its pre-voting frenzy of bribery and begging. Building new homes on a scale adequate to demand is politically unthinkable; decreasing property owners’ wealth by reducing the cost of housing or rents equally so – right up to the point of a discontent too painful for any status quo to encompass.
That’s the nature of property on a small island. And, with over seven billion people crowded onto our planet, even the largest nations are looking smaller by the day.